About Us

Pepperstone Limited is a wholly owned subsidiary of Pepperstone Group Limited, an Australian-based company which was established in 2010 and has quickly grown into one of the largest forex and CFD brokers in the world. Pepperstone Limited was launched in the UK in November 2016 to provide Pepperstone’s UK and European clients with local access to superior trading conditions and award-winning support. Here is our story.

5 Surprisingly Useful Ways to CFD Trading

CFDs (Contracts for difference) have quickly become one of the preferred ways for speculators in the financial market to trade. Why?

Because they:

Are easy to access with limited starting capital.

Have inbuilt leverage (meaning you can take trades greater than the value of your account size – perfect for short-term trading).

Are available in a variety of global markets meaning you can diversify your trading strategies across uncorrelated instruments.

But for the savvy trader, CFDs can be used as outside the box solutions for several common trading problems, or to implement more advanced strategies.

What is a CFD?

A contract for difference (or CFD) allows you to trade a stock, index or commodity without owning it. When you trade a CFD, you simply make (or lose) the difference between the price you bought it at, and the price you sell it at.

For all intents and purposes, it is very similar to trading the stock, index or commodity direct, apart from some technical differences.

Trade smaller

One of the less appreciated benefits of using CFDs is that they allow you to trade at a smaller size.

Why is this so helpful?

Not only does this let you trade on a smaller account in general, it allows you to be much more accurate in your position sizing no matter what size you’re trading.

For example, if you were to trade the S&P500 e-mini futures contract, the contract trades in $50 increments. In contrast, the CFD trades in $1 increments. The smaller contract size provides you with a much greater degree of risk control than its larger cousin.

Scale out of your trades

The smaller position size also has the great benefit of allowing you to scale out of your positions.

Because of the small minimum position size, you can split your trade into several positions (three is recommended) rather than one, and close them at separate points.

This allows you to take some profit when the market makes it available, take some more at your target, and leave some skin in the game for a big win.

Hedge your stock portfolio (and earn interest!)

Think the market is going to head down, but don’t want to sell your stocks?

Going “short” a CFD index might be just the thing for you.

By shorting a CFD, you benefit as the price of the index goes down (and lose when the index goes up), so the profits in the CFD can offset some or all of the associated losses in your stocks.

There are several reasons you may want to take this approach

You have a view that the stock market is likely to fall

You don’t want to sell your stocks because of capital gains tax

You think there will be a temporary correction and want some short-term protection

The additional benefit of being “short” a CFD is you can earn interest. When you are long a CFD, you pay interest (due to their leveraged nature). When you are short, you are on the other side of the trade, so can earn rather than pay.

Trade in the evening

CFDs provide you with access to global markets that trade 24 hours a day (expect on weekends).

The beauty of this is that you can fit your trading into your schedule. Have a day job? No sweat. You can choose a market that is active during your evening.

For example, if you are Australian based, you could look to trade the UK market index (FTSE100), which is active after you finish work for the day.

Making sure trading fits nicely into your schedule is very important. If you don’t balance your lifestyle with your trading, then you will find it difficult to trade consistently.

Gain tax benefits

Depending on your location, CFDs can be tax efficient.

If you lose when trading with CFDs, they are generally tax deductible. This means you can offset your losses against your income, in order to reduce your tax obligation, or even receive a refund in certain circumstances.

Of course, you don’t want to trade to lose in order to gain the tax benefits, but even the best traders don’t win all the time. Saving some tax when things are not going so well is a nice little perk.

Trade the flexible way

Trading CFDs is beneficial in more ways than just ease of access with limited starting captial, leverage, and the ability to trade global markets. You will also greatly increase the flexibility of your trading approach.

# As published in Finance Magnates Intelligence Report Q3 2016 (page 30). ~ Actual average daily trading volume. Sample period 1st -31st of October 2016. **Lowest spread available on Razor Account as seen on www.myfxbook.com/forex-broker-spreads. + Based on winning 9 international forex industry awards.

Risk Warning: CFDs and margin FX are leveraged products that carry a high level of risk to your capital. Trading is not suitable for everyone and may result in you losing substantially more than your initial investment. You do not own, or have any rights to, the underlying assets. You should only trade with money you can afford to lose. Past performance is no guarantee of future performance and tax laws may be subject to change. Pepperstone is not a financial advisor and all services are provided on an execution only basis. The information on this website is general in nature and does not take into account your or your client’s personal objectives, financial situations or needs. Please consider our Risk Disclosure Statement and legal documentation and ensure that you fully understand the risks involved in light of your personal circumstances before you decide whether to acquire our services. We encourage you to seek independent advice if necessary.

Pepperstone Limited is a limited company registered in England & Wales under Company Number 08965105 and is authorised and regulated by the Financial Conduct Authority (Registration Number 684312). Registered office: 68 Hanbury Street, London E1 5JL, United Kingdom.